Once you set up Tax Coordination, Betterment will look across all of your long-term investing accounts held at Betterment and automatically reorganize which assets are held in which accounts.
We’ll generally place your least tax-efficient assets in your tax-advantaged accounts (IRAs and 401(k)s), which already have big tax breaks, while diverting the most tax-efficient assets to your taxable account. In practice, each asset’s after tax return is considered in the context of every available account. The assets are generally then arranged (unequally) across all coordinated accounts to maximize the after-tax performance of the overall portfolio.
We do this in a way that keeps your overall allocation the same, while working to boost your after-tax returns. You can read more about how we do this in our white paper.
For more information on our estimates and Tax Coordination generally, see the full disclosures.